China and the World of Business • China Business and the World

Before I do my deep-dive into the small shelf of books and articles on the PRC luxury goods industry that has been growing in my library, and before the ideas of their authors start altering my own impressions, here are ten guiding principles framing the business I’ve gleaned from working with luxury brands here.

1. Even if it is dead elsewhere, “bling” lives in China

2. Today, the majority of Chinese consumers are attracted to name brand and luxury goods because of the outward statement this makes about them and their success or style.

3. A smaller percentage of Chinese consumers are attracted to luxury goods because they believe that the brands represent superior quality, materials, and workmanship.

4. An even smaller percentage are identity consumers, who patronize a brand because it has become a part of who they are. These people, who have evolved beyond simply showing off and who expect quality as a given, patronize a brand because they could not imagine it otherwise.

5. Pre-lux brand customers are interested in buying brands but lack the wherewithal to do so. These are the biggest buyers of knockoffs, and some of them (but not all or most) will eventually buy the real thing.

6. Be aware of the post-lux consumer. This is a consumer who can easily afford luxury goods, has a clear understanding of value, understands that value and style can be had for less money.

7. There is also the inconspicuous lux consumer. They want the quality and value of the brand but do not want – or fear – ostentation. Coddle them.

8. Company owned brand flagship stores are an essential part of establishing and building luxury brands in China. Not only do they provide an opportunity to experience the brand, its values, and its lifestyle, they also offer an place where consumers can be assured that they are procuring a genuine product.

9. Flagship stores are an advertising expense. Think of them that way, and worry less about actual sales.

10. Often consumers will be travelers or will have the wherewithal to travel internationally. You will sell to them in China but they will buy overseas to avoid import duties. Track them aggressively to ensure their sales are credited against your marketing in China.